Early termination of commercial lease agreement?
Discussion
Hi all,
I've inherited a couple of relatively minor lease agreements for in vehicle tracking and telemetry kit due to us acquiring another company.
The system is inferior to the one we use on the rest of the fleet so I want to migrate over as soon as possible so my fleet manager has everythign in one place. The lessor isn't being particularly flexible or thinking of the bigger picture (that I am likely to need to lease hardware again at some point) and are insisting on us paying the remaining rentals.
Rather than just close down the acquired company and let tell the lessor to shove it I'm trying to find a reasonable and pragmatic solution but any thoughts considered.
thanks in advance
I've inherited a couple of relatively minor lease agreements for in vehicle tracking and telemetry kit due to us acquiring another company.
The system is inferior to the one we use on the rest of the fleet so I want to migrate over as soon as possible so my fleet manager has everythign in one place. The lessor isn't being particularly flexible or thinking of the bigger picture (that I am likely to need to lease hardware again at some point) and are insisting on us paying the remaining rentals.
Rather than just close down the acquired company and let tell the lessor to shove it I'm trying to find a reasonable and pragmatic solution but any thoughts considered.
thanks in advance
Why should the lessor give up what he's entitled to. A deal is a deal and I wouldn't be keen to give it up on vague promises of the possibility of some business in the future.
Make a good offer for termination of just carry on paying. Be careful about closing the Company down just to avoid paying a debt for obvious reasons.
Make a good offer for termination of just carry on paying. Be careful about closing the Company down just to avoid paying a debt for obvious reasons.
Whilst you do need to take advice from a specialist lawyer as to what your contracts actually say re the acquisition of this other company it does strike me that any agreements would be between the former company and their suppliers and would cease with the end of the former company.
I didn't do the acquisition negotiation on the new company so don't have the exact details and it's not worth involving legal as it's a relatively low value. I'm sure it will have covered A&L as mentioned.
The new company will be closing anyway and the lease agreement expressly prohibits us assigning or novating without agreement of all parties (obviously the new company doesn't).
The cost isn't the issue it's just the total inflexibility of the leasing market to pragmatically resolve changes in circumstances. This clearly isn't the first time this scenario has arisen nor will it be the last. What irks me the most is paying almost double the cost of our other system which is superior.
@Realstic. Yes, in a black and white world a deal is a deal is a deal but in the real world things change. I'm trying to agree a realistic termination with the lessor as a responsible lessee rather than just take the hard line and close the old co.
The new company will be closing anyway and the lease agreement expressly prohibits us assigning or novating without agreement of all parties (obviously the new company doesn't).
The cost isn't the issue it's just the total inflexibility of the leasing market to pragmatically resolve changes in circumstances. This clearly isn't the first time this scenario has arisen nor will it be the last. What irks me the most is paying almost double the cost of our other system which is superior.
@Realstic. Yes, in a black and white world a deal is a deal is a deal but in the real world things change. I'm trying to agree a realistic termination with the lessor as a responsible lessee rather than just take the hard line and close the old co.
new666uk said:
I didn't do the acquisition negotiation on the new company so don't have the exact details and it's not worth involving legal as it's a relatively low value. I'm sure it will have covered A&L as mentioned.
The new company will be closing anyway and the lease agreement expressly prohibits us assigning or novating without agreement of all parties (obviously the new company doesn't).
The cost isn't the issue it's just the total inflexibility of the leasing market to pragmatically resolve changes in circumstances. This clearly isn't the first time this scenario has arisen nor will it be the last. What irks me the most is paying almost double the cost of our other system which is superior.
@Realstic. Yes, in a black and white world a deal is a deal is a deal but in the real world things change. I'm trying to agree a realistic termination with the lessor as a responsible lessee rather than just take the hard line and close the old co.
It doesn't sound worth wasting any time on. Make them an offer and if they don't respond within seven days, blow them out. I have often encountered total inflexibility with landlords - renegotiation in the face of changed circumstances seems like a dirty word to them. Not much different to HMRC, who will often wind up a viable company and get nothing rather than accept a negotiated settlement over a period of time.The new company will be closing anyway and the lease agreement expressly prohibits us assigning or novating without agreement of all parties (obviously the new company doesn't).
The cost isn't the issue it's just the total inflexibility of the leasing market to pragmatically resolve changes in circumstances. This clearly isn't the first time this scenario has arisen nor will it be the last. What irks me the most is paying almost double the cost of our other system which is superior.
@Realstic. Yes, in a black and white world a deal is a deal is a deal but in the real world things change. I'm trying to agree a realistic termination with the lessor as a responsible lessee rather than just take the hard line and close the old co.
Well thanks all for your learned advice. "Omnes grato propriam sententiam" is clearly the message being demonstrated here.
How many of you have any form of legal training...? I have and like to look for a creative solution to a situation instead of the obvious and was simply looking for options from a wider audience.
Let's just consider this one closed then.
How many of you have any form of legal training...? I have and like to look for a creative solution to a situation instead of the obvious and was simply looking for options from a wider audience.
Let's just consider this one closed then.
I would have thought that if you liquidate the acquired company, the lessors will be entitled to recover their assets and then lodge a claim for the remainder of the lease rentals against the assets of the liquidated business?
If you didn't want to take these assets and liabilities, surely part of the negotiation would have been that the previous owners would terminate and pay off the leases? If that wasn't done for ANY reason, suck it up and stop trying to get out of paying a valid debt.
For the lessor, I'd reckon his first loss is his best loss with you UNLESS you enter into these unspecified possible future deals ahead of him terminating the ones you don't want, giving him the opportunity to price accordingly.
If you won't do that, he is of course, free to insist on the original contract being fulflled or the AGREED termination charrge being paid.
If the lessor won't do what you want, you are, of course, free to take your business elsewhere.
If you didn't want to take these assets and liabilities, surely part of the negotiation would have been that the previous owners would terminate and pay off the leases? If that wasn't done for ANY reason, suck it up and stop trying to get out of paying a valid debt.
For the lessor, I'd reckon his first loss is his best loss with you UNLESS you enter into these unspecified possible future deals ahead of him terminating the ones you don't want, giving him the opportunity to price accordingly.
If you won't do that, he is of course, free to insist on the original contract being fulflled or the AGREED termination charrge being paid.
If the lessor won't do what you want, you are, of course, free to take your business elsewhere.
new666uk said:
Well thanks all for your learned advice. "Omnes grato propriam sententiam" is clearly the message being demonstrated here.
How many of you have any form of legal training...? I have and like to look for a creative solution to a situation instead of the obvious and was simply looking for options from a wider audience.
Let's just consider this one closed then.
'any form of legal training' is quite a broad church especially when you are the one looking for others thoughts on a car forum How many of you have any form of legal training...? I have and like to look for a creative solution to a situation instead of the obvious and was simply looking for options from a wider audience.
Let's just consider this one closed then.
The OP claims that he has some legal training, but he seems to have been asleep during the bit of the course about contracts being binding.
He seems to have flounced from his thread now, which is the standard SPL response when your "How can I be a complete
and get away with it?" thread doesn't go as you had hoped.
He seems to have flounced from his thread now, which is the standard SPL response when your "How can I be a complete
and get away with it?" thread doesn't go as you had hoped. Edited by anonymous-user on Saturday 20th December 10:16
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